Goldman moving south?; Capital One bars BNPL purchases on its credit cards

Receiving Wide Coverage ...

Florida, here we come?

Goldman Sachs, whose “identity [is] indelibly tied to New York, … may move at least some parts of a major division to Florida, with costs and the pandemic in mind.” The paper said it “has confirmed that the bank has explored moving some of its asset management unit, following a Bloomberg report that executives had scouted office locations and spoken with officials in Florida. It’s not clear how much of the business, which generates about $8 billion in annual revenue, might move. The firm has reportedly looked at areas around Miami, but may ultimately choose to move elsewhere (or not at all).”

“Saving money is a major factor. In January, Goldman identified its real estate footprint as a target in its $1.3 billion cost-cutting campaign. Since then, remote working during the pandemic has persuaded many companies to shift operations to lower-cost locations.”

Separately, Goldman “is moving to acquire 100% ownership of its securities joint venture in China. Goldman is the first global bank to seek full ownership of its securities business in China and intends to rename it Goldman Sachs (China) Securities Co.”

“One hundred percent ownership of our franchise on the mainland represents a significant commitment to and investment in China,” the bank’s top executives said in a memo Tuesday. Wall Street Journal, Financial Times

Wall Street Journal

Loans for sale

Greece’s banks, “among Europe’s weakest,” are finally getting rid of “their bad loans still festering from the eurozone crisis a decade ago. Stimulus from central banks and governments globally has sent fresh cash into funds that buy non-performing loans, reinvigorating the efforts.” The funds “are mainly marketed to institutional investors and the rich.”

Financial Times

Enablers

Deutsche Bank and Commerzbank “provided the bulk of the funding for Wirecard’s acquisition of a pair of Indian companies” that were part of “fraud allegations against the defunct Germany payments group. The loans underline the backing Wirecard enjoyed from some of Germany’s biggest financial institutions during its meteoric rise.”

New York Times

Not pleased

Visa and Mastercard “said they would investigate their financial links to MindGeek, the parent company of the adult website Pornhub.”

Visa said it was “actively engaging with the relevant financial institutions” and with MindGeek to look into the allegations made by a Times reporter that the site hosts videos involving child abuse and sexual violiance. “If the site is identified as not complying with applicable laws or the financial institutions’ acceptable use policies and underwriting standards, they will no longer be able to accept Visa payments,” the company said. “Mastercard also said it was investigating the allegations against Pornhub with MindGeek’s bank.”

Elsewhere

Banned

Capital One said it would no longer allow customers to use its credit cards to buy merchandise through “buy now pay later” (BNPL) installments, Reuters reported. “The move makes CapOne the first major financial firm to push back against the quick-growing BNPL segment which has seen startups such as Australia’s Afterpay make inroads offering interest-free shopping with no credit history required.”

“These kinds of transactions can be risky for customers and the banks that serve them,” a Capital One spokeswoman said.

“The nascent segment is subject to less regulatory scrutiny relative to its traditional consumer credit counterpart where background financial checks are required,” Reuters said. “BNPL is exempt from consumer credit law in most countries because it does not involve interest and repayments are typically limited to four.”

ESG-based pay

Deutsche Bank said it “planned to join a small number of financial institutions that link management pay to environmental, social and governance-related (ESG) criteria,” Reuters also reported. “Germany’s largest bank said that from 2021 management compensation would be tied to reaching targets on sustainable finance investments, on the sustainability ratings it receives from five leading ESG ratings agencies and on succeeding in reducing the bank’s own energy consumption.”

“Banks such as HSBC, BNP Paribas and UniCredit also have varying models in place that link pay to ESG, as more investors look to invest in companies that perform better on ESG metrics.” Deutsche “did not disclose how much of management pay is related to ESG. Banks such as BNP Paribas have tied around 20% of variable pay to meeting ESG criteria.”

Quotable

“It is our ambition to be a leader on sustainability in the financial sector, and contribute to an environmentally sound, socially inclusive and well-governed world.” — Deutsche Bank CEO Christian Sewing, announcing that the bank will link management pay to ESG criteria starting next year.